What is the serviceability buffer in Australia?
Australia's serviceability buffer is 3 percentage points added to your mortgage interest rate for the purpose of assessing whether you can afford the loan. If the actual interest rate is 6.49%, the lender must verify you can make repayments at 9.49%. This buffer is set by APRA (the Australian Prudential Regulation Authority) and applies to all banks, credit unions, and building societies. It cannot be waived or negotiated.
How it affects your borrowing
The buffer directly reduces your borrowing capacity. Every 1% increase in the stress-test rate reduces maximum borrowing by roughly 8–10% on a 30-year loan. At a 3% buffer, the reduction is significant — a borrower who could service a $900,000 loan at the actual rate may only qualify for around $780,000 when assessed at the stress rate.
Worked example
Key factors
- The buffer is fixed at 3.0 percentage points — set by APRA regulation and cannot be negotiated with your lender.
- It applies to the loan's actual interest rate — a fixed-rate loan is stress-tested at the fixed rate plus 3%, not the lender's variable rate.
- The buffer was increased from 2.5% to 3.0% in November 2021 in response to rapid property price growth.
- Non-bank lenders are not APRA-regulated and may apply a different buffer, but most still use 3% to remain competitive in securitisation markets.
See how this affects your specific situation
Calculate your borrowing capacityFrequently asked questions
Why does the serviceability buffer exist?
The buffer protects borrowers from becoming unable to repay their loan if interest rates rise. It also acts as a macro-prudential tool — by limiting how much people can borrow, it reduces the risk of a housing-debt-driven financial crisis. APRA introduced the current 3% requirement in November 2021 when low rates were encouraging very high borrowing relative to incomes.
Can I avoid the serviceability buffer?
No — if you borrow from an APRA-regulated lender (any bank, credit union, or building society), the buffer applies. Some non-bank lenders are not APRA-regulated and may apply different standards, but they typically charge more and may have stricter other requirements. The buffer cannot be waived.
Does the buffer apply to fixed rate loans?
Yes. If you fix your rate at 6.00%, the lender stress-tests at 9.00%. The buffer is applied to whatever rate the loan will actually charge — not to the lender's standard variable rate.
Could the buffer change?
Yes — APRA has changed it before (from 2.5% to 3.0% in November 2021). If interest rates fell significantly, APRA might reduce the buffer to ease lending conditions. GetReal's methodology page shows the current buffer in use and when it was last updated.
This page is part of GetReal's methodology documentation. Figures are updated when underlying data in our Supabase database changes. This is not financial advice.